FRI, APRIL. 28 2023-theGBJournal|GUINNESS Nigeria Plc Thursday reported revenue growth of 7.4% y/y in Q3-23 (9M-23: +8.2% y/y), supported by price and mix optimization across its strategic focus brands, Guinness, Ready-to-Serve, and Spirits.
In addition, resilient consumer demand and improved outlet coverage, as the brewer continues to optimize its route to consumers, remained supportive of topline expansion.
However, profit before tax settled lower at N2.71 billion, representing a 71.5% y/y decline (Q3-22: N9.50 billion).
The brewer posted a profit after tax of N1.84 billion (Q3-22: N6.46 billion) in the period following an income tax expense of N866.42 million.
The steep contraction in gross profit margin (-759bps y/y to 33.5%) in Q3-23 (Q3-22: 41.1%) reflects the faster increase in COGS (+21.2% y/y) relative to revenue growth (+7.4% y/y).
We believe the cost pressures in the period stemmed from higher input prices amid the high inflationary environment.
Elsewhere, Opex remained elevated, growing by 21.1% y/y in Q3-23 (9M-23: +24.7% y/y), indicative of increased marketing investments to support its strategic growth priorities and target market share improvement.
Eventually, EBIT and EBITDA margins printed lower at 9.0% (-944bps y/y) and 13.5% (-915bps y/y), respectively.
Further down, a net finance cost of N2.17 billion was recorded in Q3-23 (vs a net finance income of N202.82 million in Q3-22), comprising a 984.4% y/y surge in finance costs and a 9.7% y/y decline in finance income.
Analysts at Cordros Research believes that the exchange difference on the letter of credits (+608.8% to N2.12 billion) and a higher loss on remeasurement of foreign currency balances (+716.3% to N3.19 billion) drove the elevated finance costs.
Meanwhile, on finance income, there was a 13.4% reduction in short-term deposits in the period.
Guinness earnings report also showed it recorded a 71.5% y/y decline in Q3-23 standalone EPS to N0.84 (Q3-22: N2.95). Thus, 9M-23 EPS settled at N2.68 (9M-22: N6.98).
The sharp decline in EPS was driven by a weaker gross margin (Q3-23: 33.5% | Q3-22: 41.1%), higher operating expenses (+21.1% y/y), and net finance cost (N2.17 billion vs net finance income of N202.82 million in Q3-22).
Twitter-@theGBJournal|Facebook-the Government and Business Journal|email:gbj@govbusinessjournal.ng| govandbusinessj@gmail.com
